NASA to change EVM requirements

The agency proposed a rule Thursday to revise its version of the Federal Acquisition Regulation Supplement to change the reporting requirements for some firms. NASA no longer would require vendors operating under firm-fixed-price (FFP) contracts to report Earned Value Management (EVM) plans.

EVM is a performance-based tool that requires agencies to integrate information about the scope of work with cost, schedule, and performance information. This type of report lets them compare planned spending with actual spending, identify the source of performance problems, and take corrective actions sooner.

EVM reports give agency managers an early warning of potential cost overruns and schedule delays during the execution of their investments.

Federal Acquisition Regulations and the Office of Management and Budget require all agencies to use EVM. Current NASA regulations require program managers to conduct EVM analyses of their investments, and contractors to have an EVM System (EVMS) for major acquisitions with development or production work such as development or production work for flight and ground support systems and components, prototypes, and institutional investments. This includes contractors who are working under FFP contracts.

The proposed rule would create an exception to the requirement for an EVMS for contractors who perform under a FFP contract.

The proposed rule would discourage requiring EVMS for all FFP contracts. For those projects valued at more than $20 million, FFP contractors would submit a less formal scheduled management system and progress reports. For projects worth more than $50 million the contractor would have to work with the project manager to ensure complete progress information could be obtained.

NASA said there are two reasons FFP contracts should be exempt from this requirement. First, because the cost incurred by the government is fixed in these types of contracts, the EVMS requirement creates an unnecessary burden on contractors that may increase their costs, and those passed on to the government. NASA also said the reduced risk associated with FFP contracts warrants easing their reporting standards.